BILL NUMBER: AB 1407	CHAPTERED  10/10/99

	CHAPTER   699
	FILED WITH SECRETARY OF STATE   OCTOBER 10, 1999
	APPROVED BY GOVERNOR   OCTOBER 6, 1999
	PASSED THE ASSEMBLY   SEPTEMBER 9, 1999
	PASSED THE SENATE   SEPTEMBER 8, 1999
	AMENDED IN SENATE   SEPTEMBER 3, 1999
	AMENDED IN SENATE   SEPTEMBER 1, 1999
	AMENDED IN SENATE   AUGUST 26, 1999
	AMENDED IN SENATE   JULY 7, 1999
	AMENDED IN ASSEMBLY   APRIL 20, 1999
	AMENDED IN ASSEMBLY   APRIL 6, 1999

INTRODUCED BY   Assembly Member Wesson
   (Principal coauthor:  Assembly Member Granlund)

                        FEBRUARY 26, 1999

   An act to amend Sections 23355.1, 23399, 24045.5, 24071.2, and
25503.2 of the Business and Professions Code, relating to alcoholic
beverages.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 1407, Wesson.  Alcoholic beverage licenses:  auction sales:
event permit:  limited liability companies:  license transfers:
tied-house restrictions.
   (1) The Alcoholic Beverage Control Act allows a retail off-sale
licensee with annual United States auction sales revenues of at least
$5 hundred million to sell wine at an auction and deliver that wine
to any purchaser at the auction from the vendor's licensed premises
or any other storage facility under specified conditions.
   This bill would make that provision also applicable to a retail
off-sale licensee with annual wine auction sales revenues of at least
$5 million.
   (2) The Alcoholic Beverage Control Act authorizes the issuance of
an event permit to any licensee under an on-sale general license
authorizing at specified events the sale of beer, wine, and distilled
spirits only for consumption on property adjacent to the licensed
premises and owned or under the control of the licensee, as
specified.
   This bill would authorize those events to be held no more
frequently than one day in any single calendar quarter, instead of
once in any single calendar quarter.  This bill would also provide a
similar authorization to any licensee under an on-sale beer and wine
license.
   This bill would require any event authorization to be approved by
the appropriate local law enforcement agency, thereby creating a
state-mandated local program.
   (3) The Alcoholic Beverage Control Act sets forth procedures for
applications for alcoholic beverage licenses by limited liability
companies and requires limited liability companies to maintain a
register of ownership interests available for inspection by the
Department of Alcoholic Beverage Control.
   Existing law authorizes the Department of Alcoholic Beverage
Control to issue temporary permits to transferees of licenses to
operate premises during the pendency of the transfer process.
   This bill would correct erroneous and obsolete cross-references in
these provisions.
   (4) Existing provisions of the Alcoholic Beverage Control Act,
known as "tied-house" restrictions, generally prohibit manufacturers,
winegrowers, bottlers, importers, wholesalers, and others from
performing certain activities, with specified exceptions.  Existing
law allows any winegrower, wine blender, beer manufacturer, brandy
manufacturer, distilled spirits manufacturer, distilled spirits
manufacturer's agent, rectifier, distilled spirits wholesaler, and
beer and wine wholesaler, or their authorized agents, to perform
certain services for off-sale retail licensees at or on the premises
of the off-sale retail licensee with the licensee's permission
relating to stacking, rotating, servicing, and taking inventory of
stock.
   This bill would expand the permitted services relating to the
rotation, rearrangement, and stocking of wine or distilled spirits
owned or sold by the licensee.
  (5) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state.  Statutory provisions establish procedures for making that
reimbursement, including the creation of a State Mandates Claims Fund
to pay the costs of mandates that do not exceed $1,000,000 statewide
and other procedures for claims whose statewide costs exceed
$1,000,000.
   This bill would provide that, if the Commission on State Mandates
determines that the bill contains costs mandated by the state,
reimbursement for those costs shall be made pursuant to these
statutory provisions.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 23355.1 of the Business and Professions Code is
amended to read:
   23355.1.  Notwithstanding any other provision of this division,
the following acts are authorized:
   (a) Deliveries of distilled spirits by a licensee to a retail
licensee may be made from the vendor's licensed premises or from a
warehouse located within the county in which the vendor's licensed
premises are located except as permitted by Section 23383.
Deliveries to a licensed importer may also be made from any point
outside the state.
   (b) A distilled spirits manufacturer, distilled spirits
manufacturer's agent, distilled spirits rectifier general, or
rectifier may store, bottle, cut, blend, mix, flavor, color, label,
and package distilled spirits owned by another distilled spirits
manufacturer, distilled spirits manufacturer's agent, distilled
spirits rectifier general, rectifier, or a distilled spirits
wholesaler, and may deliver those distilled spirits from the premises
where stored, bottled, cut, blended, mixed, flavored, colored,
labeled, or packaged, or from a warehouse located in the same county
as that premises for the account of the owner of those distilled
spirits to any licensee that owner would be authorized to deliver to
under his or her own license, except to a retail licensee.
   (c) A distilled spirits manufacturer, distilled spirits
manufacturer's agent, distilled spirits rectifier general, rectifier,
or distilled spirits wholesaler may store and deliver distilled
spirits for the account of another licensee who would be authorized
to make the delivery under his or her own license, except that
licensee shall not make a delivery to a retail licensee on behalf of
another licensee.
   (d) A retail off-sale licensee with annual United States auction
sales revenues of at least five hundred million dollars
($500,000,000) or annual wine auction sales revenues of at least five
million dollars ($5,000,000), may sell wine consigned by any person,
whether or not the auctioned wine is "vintage wine" as defined in
Section 23104.6, at any auction held in compliance with Section 2328
of the Commercial Code to consumers and retail licensees and may
deliver wines sold to any purchaser at that auction from the vendor's
licensed premises or from any other storage facility.
  SEC. 2.  Section 23399 of the Business and Professions Code is
amended to read:
   23399.  (a) An on-sale general license authorizes the sale of
beer, wine, and distilled spirits for consumption on the premises
where sold.  Any licensee under an on-sale general license, a club
license, or a veterans' club license may apply to the department for
a caterer's permit.  A caterer's permit under an on-sale general
license shall authorize the sale of beer, wine, and distilled spirits
for consumption at conventions, sporting events, trade exhibits,
picnics, social gatherings, or similar events held any place in the
state approved by the department.  A caterer's permit under a club
license or a veterans' club license shall authorize sales at these
events only upon the licensed club premises.
   (b) Any licensee under an on-sale general license or an on-sale
beer and wine license may apply to the department for an event
permit.  An event permit under an on-sale general license or an
on-sale beer and wine license shall authorize, at events held no more
frequently than one day in any single calendar quarter, the sale of
beer, wine, and distilled spirits only under an on-sale general
license or beer and wine only under an on-sale beer and wine license
for consumption on property adjacent to the licensed premises and
owned or under the control of the licensee.  This property shall be
secured and controlled by the licensee and not visible to the general
public.  For purposes of this subdivision, "calendar quarter" means
January 1 to March 31, inclusive, April 1 to June 30, inclusive, July
1 to September 30, inclusive, or October 1 to December 31,
inclusive, of any calendar year.
   (c) This section shall in no way limit the power of the department
to issue special licenses under the provisions of Section 24045 or
to issue daily on-sale general licenses under the provisions of
Section 24045.1.  Consent for sales at each event shall be first
obtained from the department in the form of a catering or event
authorization issued pursuant to rules prescribed by it.  Any event
authorization shall be subject to approval by the appropriate local
law enforcement agency.  Each catering or event authorization shall
be issued at a fee not to exceed ten dollars ($10) and this fee shall
be deposited in the Alcohol Beverage Control Fund as provided in
Section 25761.
   (d) At all approved events, the licensee may exercise only those
privileges authorized by the licensee's license and shall comply with
all provisions of the act pertaining to the conduct of on-sale
premises and violation of those provisions may be grounds for
suspension or revocation of the licensee's license or permit, or
both, as though the violation occurred on the licensed premises.
   (e) The fee for a caterer's permit for a licensee under an on-sale
general license or an event permit for a licensee under an on-sale
general license or an on-sale beer and wine license shall be one
hundred dollars ($100) per year, and the fee for a caterer's permit
for a licensee under a club license or a veterans' club license shall
be a sum equal to the annual fee for an on-sale general license
prescribed by Section 23320, and the permit may be renewable annually
at the same time as the licensee's license.  A caterer's or event
permit shall be transferable as a part of the license.
  SEC. 3.  Section 24045.5 of the Business and Professions Code is
amended to read:
   24045.5.  The department in its discretion may issue a temporary
permit to the transferee of any license to continue the operation of
the premises during the period a transfer application for the license
from person to person at the same premises is pending and when all
the following conditions exist:
   (a) The premises shall have been operated under a license within
30 days of the date of filing the application for a temporary permit.

   (b) The license for the premises shall have been surrendered
pursuant to rules of the department.
   (c) The applicant for the temporary permit shall have filed with
the department an application for transfer of the license at the
premises to himself or herself.
   (d) The application for the temporary permit shall be accompanied
by a temporary permit fee of one hundred dollars ($100).
   A temporary permit issued by the department pursuant to this
section shall be for a period not to exceed 120 days.  A temporary
permit may be extended at the discretion of the department for an
additional 120-day period upon payment of an additional fee of one
hundred dollars ($100) and upon compliance with all conditions
required herein.  A temporary permit is a conditional permit and
authorizes the holder thereof to sell the alcoholic beverages as
would be permitted to be sold under the privileges of the license for
which the transfer application has been filed with the department.
   Purchase of beer and wine by the holder of a temporary permit
shall be made only upon payment before or at the time of delivery in
currency or by check.  Purchase of distilled spirits by the holder of
a temporary permit shall be made only upon payment before or at the
time of delivery in currency or by certified check.  However, the
holder of a temporary retail permit who also holds one or more retail
licenses and is operating under the retail license or licenses in
addition to the temporary permit, and who is not delinquent under the
provisions of Section 25509 as to any retail license under which he
or she operates, may purchase alcoholic beverages on credit under the
temporary permit.
   All checks received by a seller for beer or wine purchased by the
holder of a temporary retail permit shall be deposited not later than
the second business day following the date the beer or wine is
delivered.
   A check dishonored on presentation shall not be deemed payment.
The receipt by the seller or his or her agent in good faith from a
holder of a temporary permit of a check dishonored on presentation
shall not be cause for disciplinary action against the seller.
   Transfer of the license for which the holder of a temporary permit
has filed an application shall not be approved by the department
until the holder of the temporary permit has filed with the
department a statement executed under penalty of perjury that all
current obligations have been discharged, and that all outstanding
checks issued by him or her in payment for alcoholic beverages will
be honored on presentation.
   It shall not be a violation of this section or otherwise grounds
for disciplinary action for any licensee to extend credit to the
holder of a temporary permit or to receive payment from the permittee
in a manner other than authorized herein unless the seller had
knowledge of the fact that the purchaser was operating under a
temporary permit.  Knowledge of the fact may be established by
evidence, including, but not limited to, evidence that, at the time
of receipt of payment or the extension of credit, the premises
operated under a temporary permit were posted with the notice
required by Section 23985, or the holder of the temporary permit had
recorded notice as required by Section 24073, or the holder of the
temporary permit had published notice as required by Section 23986,
or the holder of the temporary permit had recorded and published
notice pursuant to Division 6 (commencing with Section 6101) of the
Commercial Code.
   Refusal by the department to issue or extend a temporary permit
shall not entitle the applicant to petition for the permit pursuant
to Section 24011, or to a hearing pursuant to Section 24012.
Articles 2 (commencing with Section 23985) and 3 (commencing with
Section 24011) shall not apply to temporary permits.
   Notwithstanding any other provision of law, a temporary permit may
be canceled or suspended summarily at any time if the department
determines that good cause for the cancellation or suspension exists.
  Chapter 8 (commencing with Section 24300) shall not apply to
temporary permits.
   Application for a temporary permit shall be on any form the
department shall prescribe.  If an application for temporary permit
is withdrawn before issuance or is refused by the department, the fee
which accompanied the application shall be refunded in full, and
Section 23959 shall not apply.  Fees received by the department for
issuance of temporary permits shall be deposited in the Alcohol
Beverage Control Fund as provided in Section 25761.
  SEC. 4.  Section 24071.2 of the Business and Professions Code is
amended to read:
   24071.2.  (a) When the ownership of 50 percent or more of the
membership interests in a limited liability company required to
report the issuance or transfer of memberships under Section 23405.2
is acquired by or transferred to a person or persons who did not hold
the ownership of 50 percent of the membership interests on the date
the license was issued to the limited liability company, the license
of the limited liability company shall be transferred to the limited
liability company as newly constituted.  The fee for the transfer
shall be equal to 50 percent of the original fee for the license,
except that the minimum fee shall be one hundred dollars ($100) and
the maximum fee shall be eight hundred dollars ($800).  In situations
involving the multiple and simultaneous transfer of licenses under
this section, the regular transfer fee shall be required for only one
of the licenses being transferred and the remainder of the licenses
shall be transferred for a fee of one hundred dollars ($100) each.
All of the transfer fees collected pursuant to this section shall be
deposited in the Alcohol Beverage Control Fund, as provided in
Section 25761.  Before the license is transferred, the department
shall conduct an investigation pursuant to Section 23958.  Any person
or persons who own 50 percent or more of the membership interests of
the limited liability company shall have all the qualifications
required of a person holding the same type of license.
   (b) No retail license shall be transferred by a limited liability
company under this section unless, before the filing of the transfer
application with the department, the company initiating the transfer
records, in the office of the county recorder of the county or
counties in which the premises to which the license has been issued
are situated, a notice of the intended transfer, stating all of the
following:
   (1) The name and address of the limited liability company.
   (2) The name and address of the person or persons acquiring
ownership of 50 percent or more of the membership interests of the
limited liability company.
   (3) The amount of the consideration paid for the membership
interests.
   (4) The kind of license or licenses intended to be transferred.
   (5) The address or addresses of the premises to which the license
or licenses have been issued.
   A copy of the notice of the intended transfer, certified by the
county recorder, shall be filed with the department together with the
transfer application.
   (c) Notwithstanding any other provision of this division to the
contrary, a limited liability company as newly constituted by
transfer under this section shall not be eligible for any new credit
from any person named in Section 25509 until all delinquent payments
owed by the limited liability company as formerly constituted are
made, nor shall any retail licensee, by transferring its license
under this section, avoid the provisions of Section 25509 with regard
to 42-day or 30-day periods, percentage charges for unpaid balances,
or cash-on-delivery basis.
   (d) Nothing in this section shall be deemed to authorize the
formation of a limited liability company composed of only one member
in violation of subdivision (b) of Section 17050 of the Corporations
Code.
  SEC. 5.  Section 25503.2 of the Business and Professions Code is
amended to read:
   25503.2.  (a) Notwithstanding any other provision in this
division, any winegrower, wine blender, beer manufacturer, brandy
manufacturer, distilled spirits manufacturer, distilled spirits
manufacturer's agent, rectifier, distilled spirits wholesaler, and
beer and wine wholesaler, or the authorized agent or agents or
representative or representatives of that licensee, may perform any
of the following services for off-sale retail licensees at or on the
premises of the off-sale retail licensee with the retail licensee's
permission:
   (1) Stack or arrange cases of the brand or brands of alcoholic
beverages owned or sold by the licensee performing the service in the
storeroom or warehouse where the off-sale retail licensee stores the
brand or brands.
   (2) Rotate the brand or brands owned or sold by the licensee
performing the service on shelves and in refrigerated boxes, and
rearrange bottles or packages of the brand or brands by moving the
bottles or packages horizontally or vertically from shelf to shelf in
the space and shelves allocated to the brand or brands.  This
paragraph does not permit the removal of any brand or brands of
alcoholic beverages, except beer, which are owned or sold by the
licensee performing the service, from the storeroom or other place
belonging to an off-sale retailer for the purpose of replacing
alcoholic beverages on or restocking shelves or refrigerated boxes.
   (3) Take an inventory of an off-sale retailer's stock of a brand
or brands of alcoholic beverages which are owned or sold by the
licensee performing the service and which are in the stockroom or
other place belonging to the off-sale retailer.
   (4) Service the brand or brands of alcoholic beverages owned or
sold by the licensee performing the service which are on shelves,
fixtures, or other display pieces at the off-sale retail premises,
including, but not limited to dusting bottles and shelves and
refrigerated boxes allocated to the brand or brands at the retail
premises.  The licensees authorized to render services by this
section and their agents and representatives may not price-mark
individual containers of the brand of alcoholic beverages, except
beer, owned or sold by the licensee performing the service, except
for individual bottles used on floor displays.
   (5) Rotate or rearrange the brand or brands of wine or distilled
spirits owned or sold by the licensee on, in, or among permanent
shelves, permanent fixtures, refrigerated boxes, or floor or other
displays or display pieces; stock the brand or brands onto or into
floor or other displays or display pieces; and stock the brand or
brands onto or into permanent shelves, permanent fixtures, or
refrigerated boxes for the sole purposes of the introduction of new
products, the resetting or rearrangement of existing products, or the
setting or arranging of new stores.  Incidental touching or
rearrangement of the brand or brands of another licensee by a
licensee performing any of the services authorized by this paragraph
for the sole purpose of accessing permanent shelves, permanent
fixtures, and other spaces allocated to the licensee performing the
service shall not be deemed to be a violation of any provision of
this division provided the other licensee's brands are not removed
from spaces allocated to that licensee.  Nothing in this paragraph
permits stocking permanent shelves, permanent fixtures, or
refrigerated boxes for regular inventory replenishment.
   (b) Notwithstanding any other provision in this division, any beer
manufacturer or beer and wine wholesaler, or the authorized agent or
agents or representative or representatives of that licensee, may
perform any of the services specified in paragraphs (1) to (4),
inclusive, of subdivision (a), with respect to beer, for on-sale
retail licensees at or on the premises of the on-sale retail licensee
with the retail licensee's permission.
  SEC. 6.  Notwithstanding Section 17610 of the Government Code, if
the Commission on State Mandates determines that this act contains
costs mandated by the state, reimbursement to local agencies and
school districts for those costs shall be made pursuant to Part 7
(commencing with Section 17500) of Division 4 of Title 2 of the
Government Code.  If the statewide cost of the claim for
reimbursement does not exceed one million dollars ($1,000,000),
reimbursement shall be made from the State Mandates Claims Fund.
